• Why Accountants should Lead the Estate Planning conversation .. No 2 .. "I do love you....but not trust you when I am gone"

  • In my journey working with SME clients of accounting firms, I am constantly amazed at the complex lives we  lead and the impact of structures to make it very challenging when it comes to seeing our wishes implemented when we are gone.

    Today's case study involves a client who has the following issues to deal with :

    • in a partnership of 2 trusts that  operate a manufacturing business -value say $2 m
    • in a partnership  with 2 unit trusts which owns the freehold -similar value to the business
    • client is trustee and appointor in both
    • owns a house as  joint tenants with his defacto ( life partner)
    • client and defacto are in a SMSF together
    • no children

    As I am finding is typical ,they do not have wills , nor a partnership agreement  - despite the fact car racing is a hobby.

    The estate objectives are as follows:

    • partner to buy out business interest and  freehold
    • assets to pass to defacto
    • On death of client and his defacto, the  residual estate to be split equally between 2 sets of siblings - one of which is overseas.

    Given we are dealing with a lot of non -estate assets ( eg super, and 2 trusts ) how do we ensure the clients wishes are achieved? 

    Do we just pass control to the defacto through his will and hope she does the right thing eg doesn't remarry or find religion and alter her will to cut out his siblings ? This would be the simplest thing to do.

    Working with the accountant we designed a strategy involving a succession plan for the trusts and a multi generational TT to eliminate these risks . The accountant has also agreed to play a role in the estate to act as an independent party .

    This is a great example of  the essential role the accountant played in designing the solution.

    If this process was attempted by a lawyer in isolation, the solution would not have been apparent and the costs incurred between both professionals may have become excessive and the process drawn out.